STT directors quit Eircom after rejection

bealtine

http://www.rte.ie/news/2011/1223/eircom-business.html

Representatives of Singapore's ST Telemedia have resigned from Eircom's board after its proposal to restructure the telecoms firm's €3.75 billion debt was rejected by senior lenders.

A statement from Eircom said the majority of first lien lenders had rejected STT's plans. Eircom will now go ahead with talks on a proposal from a group representing the senior lenders.

"In this context, all STT nominated directors of Eircom and the immediate holding companies have tendered their resignations with immediate effect. The main board remains otherwise unchanged with the existing Employee Share Ownership (ESOT) directors and the independent directors," an Eircom statement said.

Eircom chairman Ned Sullivan said the announcement provided "an environment of clarity" for all parties involved to move forward.

STT, which has a 65% stake in Eircom, had withdrawn an earlier proposal because of uncertainty caused by the euro zone debt crisis. It then submitted a new proposal on December 12.

"This proposal aimed to give eircom the best opportunity to be competitive and viable over the long term as well as maintaining some financial flexibility in the current challenging environment," STT said, adding that it was disappointed that the lenders' group "did not engage with us at all on this second proposal".

Eircom had breached debt arrangements with its lenders earlier this year, but has been given a waiver while talks continue on restructuring its debt.

bealtine

http://www.siliconrepublic.com/business/item/25163-stt-offer-rejected/

A €200m proposal to restructure Eircom by ST Telemedia (STT) has been rejected by the incumbent operator’s first lien lenders and as a result STT members of Eircom’s board have resigned with immediate effect.

In recent weeks Eircom's first and second-lien lenders voted to extend a "covenant waiver" on the company's massive €3.7bn debt debt until 31 January, enabling it to avoid liquidation.

A number of proposals had been tabled to save the business and in one proposal Eircom's majority shareholder STT offered to buy back the business, provide a €200m rescue investment and was in talks with ESOT (Employee Share Ownership Trust), which has one-third of Eircom shares, about a joint bid.

However, STT’s offer has been rejected.

As a result Eircom said this morning it will go ahead with detailed discussions with the first lien coordinating committee on its proposal to restructure the company’s balance sheet submitted 2 December.

As a result all STT directors on Eircom’s board have tendered their resignations with immediate effect.

Independent directors and ESOT directors remain on the board of Eircom.

Ned Sullivan, Chairman of eircom, said, "After many months of deliberations, today’s announcement regarding a majority of the First Lien lenders choosing to implement the proposal by the FLCC provides an environment of certainty for all the parties to move forward with the restructuring process.

“I would like to acknowledge the very valuable contribution of STT and the STT directors to the development of the Group over the past two years,” Sullivan said.

In January 2010 STT acquired a controlling interest in Eircom in a €140-million cash and shares deal.

John Kennedy

watty

This means?

STT owns 65% and has no directors.

And?

You couldn't make this stuff up.

clohamon

watty wrote: »

And?

The management can now name their price.

bealtine

http://www.irishtimes.com/newspaper/finance/2011/1224/1224309469041.html

EIRCOM’S SINGAPORE-based shareholder ST Telemedia has withdrawn its debt-restructuring proposal and resigned its representatives from the various boards and committees of the group’s companies.

The move follows the decision last week by first-lien lenders to the company, who are owed about €2.6 billion, to reject STT’s latest proposal to restructure Eircom’s €3.7 billion net debt.

This would seem to indicate that the Singaporean company, which owns 65 per cent of Eircom, has decided to cut its ties with the company. However, sources indicated yesterday STT might yet seek to re-enter the process.

The board of Eircom said it would proceed with “detailed discussions” with the first lien co-ordinating committee (FLC) regarding its proposal to restructure the company’s balance sheet.

This involves the lenders taking full control of the business, accepting a haircut on their debt and extending the maturity of the loans out to 2017 from 2014 currently.

Eircom chairman Ned Sullivan said there now existed an “environment of certainty for all the parties to move forward with the restructuring process”.

A takeover of Eircom by the lenders is expected to be implemented either through an examinership in Ireland or via a scheme of arrangement in Britain.

A spokesman for the lenders said their focus was to restructure Eircom’s balance sheet so the management plan to invest in a fibre rollout could be implemented as a “matter of urgency”.

He said the lenders’ co-ordinating committee would “engage constructively” with Eircom to underpin its commitment to turning around the company and, in particular, to progressing its fibre rollout programme.

Terry Clontz, STT’s senior executive vice-president for North America and Europe, said it was “disappointed” the lenders “did not engage” on its second proposal to restructure Eircom.

“STT put forward its first proposal to the FLC in early August 2011. Until November 2011, STT tried to actively engage the FLC for a speedy conclusion to the shareholder proposal.

“Within this period, despite an increasingly worsening macro-economic situation in the euro zone, STT improved upon its August 2011 proposal in an effort to conclude a debt restructuring package with the FLC in an expedited manner.

“A failure to reach any conclusion with the FLC on STT’s improved proposal, and an acceleration in the deteriorating macro-economic euro zone fundamentals, led STT to withdraw its first proposal.”

On December 12th, STT submitted a revised proposal that included an equity injection of €200 million, paid in two equal instalments one year apart.

However, STT inserted a clause that would have seen it repay the initial €100 million if Ireland had left the euro zone within a year of the payment being made.

STT also proposed taking a 75 per cent stake, offering the lenders 25 per cent of the equity. In addition, the lenders would have taken a haircut on their debts. STT’s revised offer was quickly rejected by the lenders.

Mr Clontz said the revised proposal “aimed to give Eircom the best opportunity to be competitive and viable over the long term, as well as maintaining some financial flexibility in the current challenging environment”.

He said STT was “disappointed” the lenders did not engage with it on its second offer. STT’s representatives on the main board of Eircom – Tan Guong Ching, Lee Theng Kiat and Mr Clontz – have resigned their positions.

STT took control of Eircom in January 2010, along with the employee Esot, which currently holds 35 per cent of the shares.

watty

I think Eircom needs to spend about 1 Billion (€1,000 Million Euro) or more on fibre roll out or else €200M is just a waste.

The low cost to do universal Fibre deployment (less than cost 90% geographic LTE coverage at 3Mbps) and to an extent UPC cable has made Eircom irrelevant because of the debt being more than cost of a Universal Fibre Rollout. Basically the best strategy is to slowly wind Eircom down and sell off street cabinet and ducts to homes / businesses to eNet or some other State owned wholesale infrastructure for maybe €300 Million.

Then when we have universal fibre done by someone else, turn Eircom off.

It's past the point of no return. Absolutely pointless to put money into. Starting from scratch would cost hardly more than half as much.

LH2011

watty wrote: »

I think Eircom needs to spend about 1 Billion (€1,000 Million Euro) or more on fibre roll out or else €200M is just a waste.

The low cost to do universal Fibre deployment (less than cost 90% geographic LTE coverage at 3Mbps) and to an extent UPC cable has made Eircom irrelevant because of the debt being more than cost of a Universal Fibre Rollout. Basically the best strategy is to slowly wind Eircom down and sell off street cabinet and ducts to homes / businesses to eNet or some other State owned wholesale infrastructure for maybe €300 Million.

Then when we have universal fibre done by someone else, turn Eircom off.

It's past the point of no return. Absolutely pointless to put money into. Starting from scratch would cost hardly more than half as much.

interesting times ahead for eircom, i have in the past made Terry Clontz aware of the situation on the ground here , in terms of phone line length, and poor broadband availability from eircom, in fairness, he acknowledged my email, and replied...

i wonder how long the current eircom debacle will drag on, or will they evenutally grasp the nettle...?

clohamon

LH2011 wrote: »

i wonder how long the current eircom debacle will drag on, or will they evenutally grasp the nettle...?

Who are you talking about?

watty

and what nettle? There are no nettles. Just rubble.